eu

EU – PROPOSED AUTOMATIC EXCHANGE OF INFORMATION ON ADVANCE CROSS-BORDER RULINGS AND ADVANCE PRICING ARRANGEMENTS

On 18 March 2015, the European Commission published a proposal to amend the Directive on administrative cooperation between Member States (Directive 2011/16/EU) introducing a mandatory automatic exchange of information on advance cross-border rulings and advance pricing arrangements. The proposal is part of the Commission’s response to the publication of confidential documents on Luxembourg tax deals by The Irish Times and other members of the International Consortium of Investigative Journalists in November 2014 in what became known as “LuxLeaks”.

The disclosure requirement, which the EU Commission hopes will be in place by 1 January 2016, includes not only rulings and pricing arrangements which will be issued after that date, but also rulings and pricing arrangements issued less than ten years ago that are still in force.

The Directive on administrative cooperation already obliges Member States to ‘spontaneously’ exchange tax rulings which are foreseeably relevant to tax administrations and collection in any relevant other Member State. The proposal extends this obligation, requiring national tax authorities to share information every three months on all of their advance cross-border tax rulings (defined in the proposal as “any communication or other instrument or action of similar effect, given by or on behalf of a Member State, regarding the interpretation or application of its tax laws”, automatically with all other 27 tax authorities and the Commission, following this standard format:

  • Name of taxpayer and group;
  • A description of the issues addressed in the tax ruling;
  • A description of the criteria used to determine an advance pricing arrangement;
  • Identification of the Member State (s) most likely to be affected;
  • Identification of any other taxpayer likely to be affected (not: natural persons).

The proposal is part of a wider Tax Transparency Package put forward by the Commission, which also includes the following initiatives:

  • Assessing possible new transparency requirements for multinationals;
  • Reviewing the Code of Conduct on Business Taxation;
  • Quantifying the scale of tax evasion and avoidance;
  • An Action Plan on Corporate Taxation before the summer to focus on measures ‘to make corporate taxation fairer and more efficient within the Single Market’, including a re-launch of the CCCTB and ideas for integrating BEPS at EU level;
  • Repeal of the EU Savings Directive, which now redundant since the Directive on Administrative Cooperation covers the same types of income.